Arab Today, arab today cashrich dno eyes middle east oil
Last Updated : GMT 01:27:57
Arab Today, arab today
Arab Today, arab today

Cash-rich DNO eyes Middle East oil

Arab Today, arab today

Arab Today, arab today Cash-rich DNO eyes Middle East oil

Dubai - Arabstoday

DNO International said it could buy new oil assets in the Middle East and eventually boost output at its prize Iraqi Tawke field as it looks to invest a NOK1.77bn ($320m) cash pile.The Norwegian oil firm\'s cash position was boosted by the sale of its stake in oil firm Det norske for NOK 521m, announced earlier on Tuesday.\"It is possible that we wish to buy new oil assets directly in the Middle East via our new venture [with RAK Petroleum],\" chief executive Helge Eide said Wednesday. \"It is not going to be difficult to find places to invest it in.\" \"The firm has a really strong cash position,\" said Trond Omdal, an analyst at Arctic Securities, pointing out that it is seldom the case among the smaller Norwegian oil firms like DNO. Shares in DNO were up 9.9 percent at 1205 GMT, outperforming an Oslo benchmark index up 1.1 percent.Eide said DNO would also use the money to invest in its existing portfolio of projects, which mostly focus on Iraqi Kurdistan\'s massive Tawke field, and Yemen. Tawke, which is estimated to hold about 636 million barrels of oil, has big potential for DNO but has been mired in a lengthy dispute with lawmakers.DNO received its first ever payment, $104m, in May for oil produced at its Kurdish fields and sent outside the region. The Baghdad government had refused to pay companies for oil exported from Kurdistan, as it said the contracts, signed with the regional government, were invalid.Eide said DNO could boost production at Tawke to 100,000 barrels of oil equivalent per day (boed) from the current average of 66,500 without giving a timescale. For the moment, though production would be reduced to 50,000 boed while the company moves to the next stage of development. \"We are in an initial phase [of production] ... It is important that we do not produce the reservoir too hard,\" Eide said. \"It is also due to the fact that we are looking at the next development phase of Tawke - where we will drill etc.\"DNO said further investments at Tawke would also depend on getting clarification regarding export payments. Omdal at Arctic Securities said uncertainty over payment could have been one reason for the initial reduction of Tawke\'s output.\"It is not entirely unlikely that it might be linked,\" he said. \"There is no reason to run at full capacity before there is a clarification [about payments].\" But Omdal said he did not expect the dispute to resume as Iraqi politicians appear to be getting closer to agreeing an oil law that would regulate conditions of payments. \"[At Tawke] They are saying they may reach 100,000 barrels with limited resources. It is more bullish than what they have previously said and that it might be reached relatively fast,\" Omdal said.Helge Andre Martinsen, an analyst at Nordea Markets, was more concerned by the political risk. \"This [payment] is the eternal worry [with DNO],\" he said.\"One of the main uncertainties for the entire valuation of the company is how this payment mechanism will be related to their existing contracts.\"Last week DNO announced a share buyback as it negotiates an all-share acquisition of gas fields from its main shareholder, RAK Petroleum of the UAE. DNO said the buyback was prompted by global financial markets turmoil.Eide declined to comment on the timing and the size of the share buyback on Wednesday. The company said it would seek a planed secondary listing on the London stock exchange \"shortly after\" the completion of the merger of its oil operations with RAK Petroleum. Eide did not give more precise information about the timing. DNO and RAK Petroleum agreed to merge in July.DNO also confirmed on Wednesday a rise in second-quarter core earnings to 565 million crowns ($102m) from 171 million a year ago, following preliminary results released last week. From / Arabian Business News

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Arab Today, arab today cashrich dno eyes middle east oil Arab Today, arab today cashrich dno eyes middle east oil

 



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